In the midst of a drought-induced food crisis affecting millions in the Horn of Africa, an innovative insurance programme for poor livestock keepers made its first payouts at the end of October 2011, providing compensation to some 650 insured herders who have lost up to a third of their animals in northern Kenya's vast Marsabit District.
Known as Index Based Livestock Insurance or IBLI, payouts are triggered when satellite images show that grazing lands in the region have deteriorated to the point that herders are expected to lose more than 15 percent of their herd.
IBLI is based on freely available satellite images of pasture land that make it possible to accurately predict animal deaths. This technology overcomes a major barrier that so far has bedevilled efforts to provide livestock insurance in poor regions: the prohibitively high costs and logistics of confirming animal deaths in herds that roam across vast distances in remote areas.
The insurance project was developed in partnership between Cornell University, the Nairobi-based International Livestock Research Institute (ILRI) and the Index Insurance Innovation Initiative programme at the University of California-Davis; it was first launched in 2010 in Kenya's northern Marsabit District.
Under the terms of the policy, insured herders are compensated for any losses above 15 percent, with the 15 percent threshold acting as a sort of deductible. For example, a cattle herder who lives in an area with a livestock mortality rate of 33 percent receives a payout covering 18 percent of his or her animals.
One major success thus far is that the livestock mortality index, which is at the heart of the programme, appears to be working. The fatality rate predicted by the satellite assessments of forage loss is tracking very closely to surveys of animal deaths on the ground.
The insurance scheme is a wholly privately funded product. Commercial partners Swiss Re, Equity Bank and UAP Insurance Ltd. implement the programme. The IBLI project is further funded by USAID, the European Union, the British Government, the World Bank, the Microinsurance Facility and the Global Index Insurance Facility.
